Subdomains as Accounts

As a reseller, I want to allow my clients to sign-up without requiring a domain name. I was planning on achieving this by using subdomains, but whenever I try to add a test account, I get an error message that the domain name already exists. I've already established the subdomain within the main account.

I know I can setup a subdomain, and an FTP account restricted to just that folder, but I'd like to offer my clients the flexibility of the cPanel.